The market is funny sometimes. Nothing's really changed in the month since Watson Pharmaceuticals (NYSE:WPI) updated its second-quarter earnings forecast and lowered its outlook for both the quarter and the year, but the stock is up more than 10% to $27.34 in midday trading today after the company officially announced its second-quarter earnings. Maybe investors were just relieved that it hasn't gotten worse?

In the second quarter, Watson reported net revenue growth of 12% to $399.4 million. However, net income fell 31% to $34.9 million, or $0.32 per share. Excluding charges from a milestone payment and a debt repurchase, earnings clocked in at $0.40 per share -- roughly where the company said it'd be.

Sales of generic drugs remained hot, jumping 39% to $224.3 million. But as the company reported last month, poor sales of its women's health products -- namely oral contraceptives -- as well as declining sales of mature pain products helped mute those gains, leading to an 11% drop in branded product sales to $165.8 million.

The higher mix of generic to brand product sales also affected gross margins, which slipped to 50.2% from 56.6% in last year's second quarter.

But the outlook hasn't changed. For the full year, Watson still expects to earn $1.63 to $1.68 per share -- $1.85 to $1.90 per share excluding charges -- on approximately $1.6 billion in net revenues. Meanwhile, the company forecast third-quarter earnings excluding charges of $0.44 to $0.46 per share on about $390 million in revenues.

While Watson has struggled in its branded efforts -- an effort generic counterparts Mylan Laboratories (NYSE:MYL), IVAX (AMEX:IVX), and Teva Pharmaceutical (NASDAQ:TEVA) are also undertaking -- it has certainly been successful in marketing generic versions of drugs from companies such as Pfizer (NYSE:PFE) and Bristol-Myers Squibb (NYSE:BMY). And on the strength of that business, Watson may be worth a look at less than 15 times this year's earnings.

Fool contributor Jeff Hwang owns none of the companies mentioned above.